The Mediating Role of AI Readiness in the Relationship Between the Knowledge Economy and Labour Market Resilience

Advances in artificial intelligence technologies have made countries’ capacity to develop, adopt and effectively utilise these technologies increasingly important. This study examines the relationships between the Knowledge Economy, Artificial Intelligence Readiness and Labour Market Resilience, with a particular focus on the indirect role of Artificial Intelligence Readiness. The analysis combines data from the Global Knowledge Index (GKI) 2025, the Government Artificial Intelligence Readiness Index 2025 and the Global Labour Resilience Index (GLRI) 2025 for a cross-sectional sample comprising 112 countries. Partial Least Squares Structural Equation Modelling (PLS-SEM) was used to evaluate the proposed relationships. The findings indicate that the Knowledge Economy is positively related to Artificial Intelligence Readiness (β = 0.789, p < 0.001) and Labour Market Resilience (β = 0.533, p < 0.001); and that Artificial Intelligence Readiness is also positively related to Labour Market Resilience (β = 0.453, p < 0.001). The indirect relationship between the Knowledge Economy and Labour Market Resilience, mediated by Artificial Intelligence Readiness, is positive and statistically significant (β = 0.357, p < 0.001; 95% bootstrap CI [0.191; 0.484]) and the VAF value is 40.1 per cent. The model explains 62.2 per cent of the variance in AI Readiness and 87.1 per cent of the variance in labour market resilience. The findings provide cross-country evidence regarding the interrelated roles of knowledge economy conditions and AI readiness in terms of labour market resilience, and indicate that policies aimed at strengthening labour market resilience must take into account both knowledge-based capacities and countries’ levels of preparedness for AI-driven transformation.